Health IT Infrastructure Could Net Big Savings

By M.L. Baker |
Posted 2005-01-22

A national system for electronic health information could save as much as $78 billion dollars a year, or about 5 percent of current health care spending, according to a study by the Center for Information Technology Leadership, a nonprofit research group focused on health care.

But about half of that value will be lost if health care providers do not make their systems interoperable, or capable of interfacing with each other. As hospitals and their outpatient affiliates move toward adopting EHR (electronic health record) systems, they do so without nationwide standards of interconnectivity. That often means that a patients information from one provider is inaccessible to other providers.

The study, published this week in the journal Health Affairs, came out just as a public-comment period ended for a nascent federal project called the National Health Information Network.

The study estimated that building the network would cost $276 billion over the next decade, including the cost for all U.S. providers to implement new clinical information systems. Once established, maintaining the systems would cost about $16.5 billion annually. But estimates of potential savings dwarf these costs.

Potential savings are based on a decrease in unnecessary or inefficient procedures and include nearly $32 billion in lab costs and $26 billion for radiology services. Faster handling of referrals and charts could save more than $13 billion a year, and fewer call-backs with pharmacies nearly $3 billion.

Indirect savings that might come from better public health or increased productivity from workers spending less time with doctor appointments were not considered.

The study predicted that most of the savings would accrue to health care providers. However, it did not consider the potential loss of revenue from eliminating duplicate procedures. Other studies have found that a top barrier to health IT has been its cost and the lack of financial incentives to health care providers.

Though providers typically shoulder the logistical and financial burdens of implementing EHR systems, health care payers, like Medicare and insurance companies, are generally believed to reap the bulk of the savings.

Unlike other reports recommending that physician offices should ease into electronic medical records with less expensive and easily implemented systems such as electronic prescribing, this study says an incremental approach to interoperability could lead to costly chaos.

"It is not realistic for the nation as a whole to plan to step up over time, hoping for an orderly progression," the report said. The cost of coordinating disparate local solutions would eat into much of the potential improvements in cost and convenience.

In a commentary accompanying the survey, David Brailer, the national health IT coordinator, emphasized the need for interoperability, "Without some means of integration, choice leads to fragmentation of the consumers health care experience. Fragmentation, in turn, results in errors, duplication, lack of coordination and many other problems."

However, he said that whether interoperability must precede widespread EHR adoption was "a central question," noting that many felt that interoperability would naturally follow once sophisticated systems were commonplace.

In November, Brailer formally solicited public input on a project called the National Health Information Network to promote interoperability. The comment period ended this week.

Thirteen health IT groups banded together to submit a joint response, which called for "open, consensus-driven and nonproprietary standards," as well as uniform policies for securing patient privacy, using the Internet and existing infrastructure for connecting.

The nonprofit group Faster Cures suggested establishing guidelines (PDF file) that would allow patient data to be used for collaboration and research to speed treatments for disease while preserving privacy.

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